2nd UPDATE: AIG Names Tucker Head Of AIA Ahead Of HK Listing

19th Jul 2010 12:20

(Adds background and analyst comment.) By Nisha Gopalan and Aries Poon Of DOW JONES NEWSWIRES HONG KONG (Dow Jones)--American International Group Inc. (AIG) said Monday that it has named Mark Tucker, the former chief executive of U.K. insurer Prudential PLC (PUK), as the new head of its overseas life insurance unit, AIA Group Ltd., as it moves toward an initial public offering for AIA on the Hong Kong stock exchange "as soon as practicable." The appointment raises the possibility that Tucker may in the next few years lead AIA in bidding for the Asian operations of Prudential, which itself failed last month in buying AIA, London-based analysts said. Tucker has been named executive chairman and chief executive of AIA, while Hong Kong-based Mark Wilson, now AIA's chief executive, will work closely with Tucker to support a smooth transition between now and the end of the year, AIG said. After that, Wilson expects to pursue other opportunities, the insurer said, without elaborating. AIG is aiming to raise as much as $23 billion from share sales of AIA to strategic investors and to the public in a Hong Kong offering by late October or early November, people familiar with the situation said earlier. The cash will go to the Federal Reserve Bank of New York, which holds a stake in AIA and has been AIG's top creditor since a federal bailout of the insurance giant in 2008. Prudential, led by Chief Executive Tidjane Thiam, last month failed in buying AIA for $35.5 billion as its shareholders balked at the price tag. Tucker was CEO of Prudential from May 2005 to September 2009, and CEO of Prudential Corp. Asia from 1992 to 2003. In his Asian role, Tucker "developed and led the strategy that propelled Prudential's rapid growth across Asia and established a strong regional presence," AIG said. Tucker, a British citizen, was appointed non-executive director at the Bank of England, the U.K.'s central bank, just before he left Prudential. As CEO of Prudential, Tucker had long eyed AIA as a potential acquisition, but was held back from pursuing it due to the effects of the financial crisis. Tucker was no longer part of Prudential when Thiam launched his bid in early March. AIG CEO Robert Benmosche also pushed hard for the sale of AIA to Prudential but was overruled by the AIG board of directors, which has since decided that AIA should revert to an earlier plan to launch an IPO by the end of 2010. AIA's Hong Kong listing is subject to regulatory approvals and market conditions, AIG said Monday. "After reviewing various options to monetize AIA's substantial value, we have concluded that an IPO is our best option," Benmosche said. "Mark Tucker has the public company experience, track record, relationships, judgment, and leadership qualities that will help us accomplish our ambitious goals of not just taking a company of AIA's size and scope public, but building on this great platform for the long term to create Asia's pre-eminent, publicly traded insurance company. "Teams at both AIG and AIA have already done an enormous amount of very good work to prepare for an IPO, and we remain committed to ensuring that we execute this plan for the benefit of policy holders, distribution partners, shareholders, and U.S. taxpayers," Benmosche said. Prudential PLC isn't related to Prudential Financial Inc. of the U.S. In London, Panmure Gordon analyst Barrie Cornes said it is "bitter sweet" for Prudential to see its former CEO become chief of AIA. "The news finally rules out any lingering thoughts of a possible dramatic return to the Pru by the well-regarded Mark Tucker. On the other hand, it raises the possibility that Pru might be able to sell its Asian operation to AIA at some later date, once AIA has floated," Cornes said. Using the 13-times new business profits multiple used by Prudential in a revised bid of $30.4 billion for AIA, Cornes estimates that Prudential's Asian business could be worth around GBP12.6 billion. Analysts from Oriel Securities said AIA could either bid for Prudential's Asian business or for Prudential in its entirety and then sell off the non-Asian parts. "While this would be seen as positive for Prudential [shares], we would expect any such move would be at least two years away" because AIA would need a track record as a quoted company, Oriel said. AIA reported $658 million of pretax income in the first quarter of 2010 compared with $390 million in the same period a year ago. Wilson, who has led AIA through the AIG crisis, has more than 20 years experience in the Asia-Pacific insurance industry. He was appointed deputy president of AIA in 2006 by Edmund Tse, having previously been CEO of AXA Asia Pacific. In May 2009, he succeeded Tse as AIA Group CEO and President. AIA has branch offices, subsidiaries and affiliates in Australia, Brunei, China, Hong Kong, India, Indonesia, Macau, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam. At 1120 GMT, Prudential shares were down 3 pence, or 0.6%, at 519 pence. -By Nisha Gopalan and Aries Poon, Dow Jones Newswires; 852-2832-2343; [email protected] (Vladimir Guevarra in London contributed to this article.) (END) Dow Jones Newswires July 19, 2010 07:20 ET (11:20 GMT)